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Rufe Criticizes Prosecutors' Move, Sides With Federal Defenders

A federal judge admonished prosecutors in a case involving the contentious involvement of federal public defenders representing death-row inmates in state court proceedings.

S.&P. Calls Federal Fraud Suit Payback for Credit Downgrade

Standard & Poor’s on Tuesday denounced a $5 billion fraud lawsuit by the United States government as retaliation for its 2011 decision to strip the country of its AAA credit rating.

The McGraw Hill Financial unit of S.& P. was the only major credit rating agency to remove the United States’ top rating, and the only one the Justice Department sued over claims of misleading banks and credit unions about the credibility of its ratings before the 2008 financial crisis.

In a filing on Tuesday in Federal District Court in Santa Ana, Calif., S.& P. said that the lawsuit was an effort to punish it for exercising its First Amendment rights and that the suit seeks “excessive fines” in violation of the Eighth Amendment.

It said the government’s “impermissibly selective, punitive and meritless” lawsuit was brought “in retaliation for defendants’ exercise of their free-speech rights with respect to the creditworthiness of the United States of America.”

A Justice Department spokesman declined to comment.

S.& P. seeks the dismissal of the lawsuit, which in July, Judge David Carter of Federal District Court allowed to go forward, with prejudice, meaning that it cannot be brought again. The August 2011 downgrade of the United States’ credit rating to AA-plus from AAA reflected concern about the federal government’s ability to address the nation’s swelling debt.

The government’s Feb. 4 lawsuit accused S.& P. of inflating ratings to win more fees from issuers, and failing to downgrade ratings for collateralized debt obligations despite knowing they were backed by deteriorating residential mortgage-backed securities.

In Tuesday’s filing, S.& P. estimated that more than $4.6 billion of the losses it claims might have resulted from collateralized debt obligations that were structured, marketed or sold by Bank of America or Citigroup. It also said more than $1 billion came from debt that had never been issued.

S.& P. also said the government lacked authority to sue under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, because no federally insured financial institutions had been affected by violations.

The government has in recent months made more use of that act, which was passed after the 1980s savings and loan crisis, in part because it has a lower burden of proof and a longer statute of limitations than other laws.

Hyundai Workers' Federal Wage-and-Hour Suit Survives

Federal claims in a proposed class action filed against Hyundai may proceed, a federal judge in Pennsylvania has ruled, but claims under state law are pre-empted.

Your Money: Gay, Married and a New Land of Federal Taxation

Many of those couples who fought long and hard to win that right may pleasantly find themselves paying Uncle Sam far less and may even get a refund from previous years. (But plenty of others will pay more.)

The Internal Revenue Service this week set down the rules that will cost or save a particular couple money. That will depend on how much they earn, whether both spouses are working, and whether, together, they earn too much to claim the same sort of tax-saving deductions and credits they did when they were filing as singles (many of which phase out as income rise).

The rules also begin to clarify how couples residing in the 37 states that do not sanction same-sex marriages will fare. (Warning: Filing state returns won’t be easy, but not so bad that you’ll consider moving.)

Gay couples can now plan for how their financial lives will change when it comes to federal taxes, even though big questions remain about benefits like Social Security and veterans’ benefits. The ruling applies to a broad range of tax rules where marriage comes into play, and some will result in major savings. Some couples will no longer have to pay thousands of dollars in taxes on the value of their spouse’s health insurance, something their opposite-sex peers did not have to pay. Individuals can inherit a spouse’s retirement account and other assets without any extra tax implications. Nonworking spouses will be able to open an I.R.A. on their spouse’s earnings record. And the list goes on.

“The Supreme Court opened the door to nationwide recognition of same-sex marriage, but the Internal Revenue Service swung it wide open,” said John McGowan, who heads the lesbian, gay, bisexual and transgender practice at Northern Trust.

First the best news: If you would have received a refund by filing a joint federal return, you can generally collect that money for the last three years. (Keep reading, I’ll tell you how below). If you would have owed money, you are under no obligation to pay more.

For the 2013 tax year, all legally married couples will be required to file their returns together as either “married filing jointly” or “married filing separately,” according to the Treasury and Internal Revenue Service, which announced the rules on Thursday. That’s the case even if, for instance, a gay couple legally married in the District of Columbia goes back home to Virginia where gay unions are not allowed.

Here are some answers to several questions that may be on couples’ minds:

WILL I OWE MORE TAXES OR LESS? Generally speaking, couples will pay less in federal income tax when one person earns much less than the other or does not work at all. High-income couples with two working spouses will probably pay more. That’s the marriage penalty. You’re welcome.

A married same-sex couple in which one spouse earns $100,000 and one stays at home with their child will save about $4,200 in federal taxes by filing a joint federal return, according to Pan Haskins, an accountant in Oakland, Calif., who works with gay couples.  (If the same couple lived in a community property state like California, Washington or Nevada, their federal taxes would be the same as married couples in other states, but they would pay about $600 more than they pay now.)

RETROACTIVE REFUNDS? If a couple would have received a federal tax refund had they filed a joint return, they are entitled to claim that money for three years from the date the return was filed or two years from the date the tax was paid, whichever is later, according to the I.R.S. So generally speaking, most people will be able to amend their returns for 2010, 2011 and 2012. Taxpayers should use I.R.S. Form 1040X, which will allow them to amend previous returns.

AM I OWED ANYTHING ELSE? Perhaps. Unlike straight married couples, most gay individuals with same-sex spouses who were covered by their employer’s health plan owed income taxes on the value of that coverage (unless the employer paid them for the employee, which some companies did). In addition, these workers also paid for their portion of the premium using after-tax dollars instead of being able to pay pretax and reduce their taxable income.

If you paid those extra taxes, you can claim a refund on both of those items, according to the I.R.S. (which said it would be issuing streamlined procedures to help taxpayers). So if you paid extra income taxes on, say, $3,000 worth of health insurance annually for each of the last three years, or $9,000, you could get a nice chunk of money back, depending on your tax bracket.

WHAT ABOUT STATE TAX RETURNS? If you live in a state that recognizes your union, your life just got much easier. Couples residing in places like California, Massachusetts or New York can file a joint federal tax return as well as a joint state return, just as opposite-sex couples do.

But it’s not entirely clear what will happen in each of the states that do not recognize same-sex marriage, experts said, since some states require that a taxpayer’s state return filing status mirror their federal return. “I love that state taxing authorities are having to wrestle with this,” said Patricia Cain, a professor at Santa Clara University School of Law and an expert on sexuality and federal tax law. “It does remain to be seen, but it is likely that you won’t be filing jointly at the state level” if your state does not recognize your union.

If that’s the case, filing your state tax return will become more cumbersome. Each spouse will probably need to fill out a dummy federal return as if they were filing on their own (either as single or head of household) and then transfer the information on that return to their state return, which also must be filled out as single or head of household, according to tax experts. “It will be awkward, it will be time-consuming, but not necessarily difficult,” said Nanette Lee Miller, who leads the lesbian, gay, bisexual and transgender practice at Marcum, an accounting firm.

The Trade: The Power Behind the Throne at the Federal Reserve

Federal Judge Halts Plans to Start Horse Slaughters

Judge Christina Armijo of Federal District Court issued a restraining order in a lawsuit brought by the Humane Society of the United States and other groups in a case that has set off an emotional national debate about how best to deal with the tens of thousands of unwanted and abandoned horses across the country.

Judge Armijo scheduled another hearing for Monday in the lawsuit. The move stops what would have been the resumption of horse slaughters for the first time in seven years in the United States.

The groups contend the Department of Agriculture failed to do the proper environmental studies before issuing permits that allowed the companies to open horse slaughterhouses, which they had said they planned to open as soon as Monday.

The horse meat would be exported for human consumption and for use as zoo and other animal food.

The Valley Meat Company of Roswell, N.M., has been at the fore of the fight, pushing for more than a year for permission to convert its cattle plant into a horse slaughterhouse.

The Agriculture Department in June gave the company the go-ahead to begin slaughtering horses. Federal officials said they were legally obligated to issue the permits, even though the Obama administration opposes horse slaughter and is seeking to reinstate a Congressional ban that was lifted in 2011.

Another permit was later approved for Responsible Transportation in Sigourney, Iowa.

The move has divided horse rescue and animal welfare groups, ranchers, politicians and American Indian tribes about what is the most humane way to deal with the country’s horse overpopulation.

Some American Indian tribes, including the Navajo and Yakama nations, are among those who are pushing to let the companies open. They say the exploding horse populations on their reservations are trampling and overgrazing rangelands, decimating forage resources for cattle and causing environmental damage.

On the other side, the actor Robert Redford, former Gov. Bill Richardson of New Mexico, current Gov. Susana Martinez and the attorney general, Gary King, are among those who strongly oppose a return to domestic horse slaughter, citing the animals’ longtime role as companion animals in the West.

Federal Judge Clamps Down on AG, Enjoins State Suit

A federal judge has protected a 2009 settlement in a multidistrict RICO case worth potentially $530 million, by enjoining a similar case brought by the Pennsylvania attorney general in state court.

Federal Judge to Zoloft MDL Lawyers: It's Time to Speed

The Zoloft MDL is going to have to pick up its pace if it's going to usher the way for state courts that are hearing similar cases, the federal judge presiding over the case told a room full of attorneys in federal court in Philadelphia during a status conference Thursday.

Judge sets new federal election calendar for Ga.

ATLANTA (AP) - A judge has set an election calendar to be used by Georgia in next year's federal contest.

Four Judges Re-nominated for the Federal Bench in Pennsylvania

Four nominees for seats on the federal bench in Pennsylvania are among the 33 people that President Obama has re-nominated for seats across the country during the 113th Congress, which was sworn in today.

Municipal Court Subject to Federal Investigation

Federal law enforcement is investigating Philadelphia Municipal Court, multiple sources have confirmed to The Legal.

Environmental Law: Federal Standard Applies to Protective Orders for Trade Secrets

The Commonwealth Court has adopted the federal standard for requests for protective orders covering trade secrets, which requires a party seeking discovery to show it has a compelling need to obtain the information that outweighs the potential harm of disclosure.

G.S.A. Has Federal Property to Sell, but It’s Not Easy

WASHINGTON — As government agencies are forced to do more with less, the General Services Administration has stepped up its efforts to dispose of surplus government buildings across the country in new and more profitable ways, instead of simply auctioning them off.

In an effort to streamline operations, the G.S.A., the federal government’s landlord, has sold hundreds of buildings since 2010. But in the last several months it has been working with private developers to negotiate land swaps that reduce the government’s real estate portfolio while consolidating offices and saving money for taxpayers. The goal, the agency’s acting administrator, Dan M. Tangherlini, wrote in a staff memorandum, is “to maximize the value of our real estate assets and reduce our federal footprint.”

The federal government owns about 14,000 excess buildings and other structures, and the G.S.A. is working to dispose of them. 

The strategy is evident here, where a proposed land swap involving the 40-year-old F.B.I. building last month yielded 35 formal expressions of interest, and in Miami and Los Angeles, where plans are under way to replace and dispose of two old federal courthouses. “What we’ve seen is more attention and focus put on this activity, in part because of fiscal constraints across the government,” Mr. Tangherlini said. “At G.S.A., we are asking ourselves if there are other ways to speed the process of disposal and get positive outcomes as a result.”

Dorothy Robyn, the Public Buildings Service commissioner for the G.S.A., said at a public meeting on the F.B.I. building in January that “functionally,” much of the government’s property, with an average age of 47 years, is “out of date.” But despite government efforts to sell obsolete or surplus properties quickly, the process has sometimes bogged down in political, technical and economic issues.

The federal courthouses in Miami and Los Angeles were long overdue for replacement, but how to do it cheaply and efficiently and what to do with the old structures have presented challenges.

Disposing of the David W. Dyer Federal Building and United States Courthouse in Miami has proved to be far more complicated than expected. Built in 1933 and added to the National Register of Historic Places in 1983, the 170,000-square-foot Mediterranean Revival structure was vacated in 2008 when a new court building was completed. The G.S.A.’s initial plan to renovate the older courthouse for continued use as a federal building was scrapped because of the $60 million cost. When the G.S.A. sought expressions of interest in the building last August, only two responses came in, neither acceptable to the agency.

One of the proposals came from Miami Dade College, which wanted to convert the old four-story courthouse, across the street from the college, into an educational and cultural center. But the courthouse is connected to another courthouse, and they share a courtyard. Separating the utilities and dividing secure areas from nonsecure ones in the buildings could cost nearly $15 million, which the G.S.A. said it would not pay.

“I don’t see we have any budget for that,” said Juan C. Mendieta, a spokesman for Miami Dade College. “We have a pretty challenging budgetary situation here in Florida.”

At a House subcommittee hearing in Miami in March, John E. B. Smith, the Public Buildings Services commissioner for the Southeast Sunbelt Region, testified that “the Dyer courthouse helps highlight the challenges of developing long-term asset strategies in changing fiscal times, and the unique characteristics of properties that can present hurdles to repositioning.”

The swapping strategy being applied to the F.B.I. building, where a developer will get the old headquarters in return for building replacement headquarters elsewhere in the region, is now also being tested in Los Angeles.

For years, federal judges, citing security concerns, have been pushing for a new building to replace the late 1930s courthouse on North Spring Street. In December, the G.S.A. awarded a $318 million contract to Clark Construction, of Bethesda, Md., to build a 550,000-square foot courthouse at another city location.

Tower at O’Hare May Be a Victim of Federal Cuts

“A.C. 5837 O’Hare tower runway two seven right cleared to land,” she said in one unpunctuated breath into her radio headset, indicating to the crew of a United Express Embraer 50-seat jet inbound from Appleton, Wis., that the runway, 1.4 miles long and 150 feet wide, was clear. “Winds three zero zero at one zero,” she added, indicating that there was a gentle breeze, mostly headwind.

All was running smoothly on a sunny afternoon this week, but dark clouds loom next month here at the nation’s second-busiest airport and at smaller airports across the country. The Federal Aviation Administration announced Friday that it would close 149 control towers in early April at smaller airports because of the across-the-board federal budget cuts known as the sequester, but even O’Hare’s north tower is on a list of potential casualties, along with O’Hare’s runway 27 Right. Federal Aviation Administration staff reductions of 10 percent under the cuts could shut both down, at least for part of each day.

In a statement, Transportation Secretary Ray LaHood called the 149 closings “very tough decisions” but said that “unfortunately, we are faced with a series of difficult choices that we have to make to reach the required cuts under sequestration.” The agency is facing more than $600 million in budget cuts this year. Among the towers to close are those at Ithaca Tompkins Regional Airport in New York, Danbury Municipal Airport in Connecticut and Branson Airport in Missouri.

All of O’Hare’s 68 controllers recently received certified letters telling them to expect, as of April 21, one day of furlough in each two-week, 80-hour pay period. Although the F.A.A. has not worked out the details, the north tower is vulnerable because it takes three people to run it: an arrivals controller like Ms. Prior, a ground controller to direct the planes through a maze of taxiways and a relief controller to give the other two a break.

“It used to be wind and weather,” said Robert C. Flynn, the air traffic control manager at O’Hare and a veteran of 30 years there and at two nearby radar centers, describing the factors that determine O’Hare’s operability. “Now it’s going to be staffing, wind and weather.”

O’Hare’s north tower opened with 27 Right in 2008, and raised O’Hare’s capacity when the wind is coming from the west — about 70 percent of the time — to land 114 airplanes an hour, up from 72. It was not simple, though. The new runway was built beyond what had been “hangar alley,” the northern edge of the airport, and because the hangars block the view of the western half of the runway from the main tower, a new one, north tower, was needed.

The project cost more than $450 million and required moving 2,800 residents and 900 graves from a cemetery. By most accounts, it has been a stunning success. Before it opened, the F.A.A. had to limit the number of planes that the airlines could operate from here, and even so there were extensive delays. Now the airport, surpassed only in traffic by Hartsfield-Jackson Atlanta International in Georgia, functions far better.

But the planned furloughs are creating a cascading series of new problems, not only with the north tower but in the skies far beyond it.

O’Hare’s main tower, for example, takes a crew of 9 or 10. Dan Carrico, the union representative for the tower controllers, said its workload could rise, too, if staffing shortages in the Chicago region or elsewhere force the F.A.A. to hold planes on the ground at O’Hare, as is commonly done in thunderstorms. Holds mean more instructions from controllers per takeoff as they direct planes where to park or rejoin the queue for takeoff.

Airplanes are directed to O’Hare by controllers in a windowless radar room, called the Terminal Radar Approach Control, in South Elgin, Ill., about 30 miles away. When staffing there is cut by 10 percent, there may not be enough controllers on duty to manage a flow to three different runways at O’Hare, officials said.

“We’re used to dealing with pieces of the system being impacted,” Mr. Flynn said. “We do it all the time, like when there’s a thunderstorm in the Ohio Valley. When all the pieces of the system are impacted, that’s fresh territory.”

Among the first cuts will be training new controllers to replace those retiring.

Ms. Prior, the air traffic controller, said she was unhappy about losing 10 percent of her pay, but she is pregnant with her first child, due on Aug. 16, and is planning to take off some unpaid time anyway, she said.

Mr. Flynn thought about that. “Well, you timed that right,” he said.

Blindness Can't Stop Attorney From Landing Federal Clerkship

Daniel Matzkin
Photo by J. Albert Diaz

It wasn't until after legal secretary Nancy Cedeno sent a funny cartoon by email to attorney Dan Matzkin that she realized her mistake.

Cedeno doesn't think of Matzkin as blind, nor does anyone else at his office at Squire Sanders in Miami.

"From day one he's always had a great sense of humor," Cedeno said.

Blind since birth with a condition called Leber congenital amaurosis, Matzkin, 29, never let his disability stand in his way through undergraduate studies at Wesleyan University and law school at the University of Michigan, as a litigation associate at Squire Sanders and in applying for a clerkship with Judge Adalberto Jordan of the U.S. Court of Appeals for the Eleventh Circuit.

Matzkin beat out more than 100 applicants to land the clerkship starting this fall. According to the American Association of Visually Impaired Attorneys, few blind attorneys have ever clerked for a federal judge. Isaac Lidsky is an exception. He clerked for U.S. Supreme Court Justice Sandra Day O'Connor in 2008.

"It's so competitive you have to be surprised when you get a federal clerkship," Matzkin said. "I know folks with great credentials who didn't get it. I think it will be a great opportunity to see how the court works."

The judge previously worked at Steel Hector & Davis, which merged with Squire Sanders. So when Matzkin applied, Jordan called around to inquire about him. Hearing only positive feedback, he decided to bring in Matzkin for an interview. Knowing Matzkin was blind, the judge had reservations.

"I wondered how it was someone with that kind of issue can manage the rigors of a legal practice," Jordan said.

After all, a law clerk routinely reads hundreds of pages to prepare a judge for oral argument and conduct legal research.

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Lackawanna President Judge Appears Before Federal Grand Jury

Lackawanna County President Judge Thomas J. Munley testified before a federal grand jury Tuesday, according to sources in the legal community.

Federal court hears 'Sister Wives' lawsuit

SALT LAKE CITY (AP) - A federal judge heard arguments on whether Utah can prohibit plural marriage but issued no immediate ruling in a lawsuit by the stars of the reality show "Sister Wives."

Federal Judge Rules on Heart Of Medicare Part D Program

A qui tam suit alleging fraud against one of the biggest private contractors for the multibillion-dollar Medicare Part D prescription-drug program survived a motion to dismiss last week.

Federal Judge Allows Amended Complaint Against Egg Producers

The federal judge presiding in antitrust litigation against egg producers and processors has allowed plaintiffs who are direct purchasers to amend their complaint for a third time.